Succession planning is both urgent and important for CEOs.

It becomes urgent when the departure of the CEO or key leader impacts the organization. The “next up” philosophy works well in sports and for big companies, but small and midsize businesses don’t have the luxury of a large staff with deep bench strength. When a leader departs, the business surrenders essential knowledge.

[Get the report] Succession Planning: The CEO’s Guide to Building the Leadership Team of the Future

Succession planning becomes important when CEOs look ahead to the leadership demands of the future. Distinct from an exit plan — which is the strategy for the exit of an owner — succession planning addresses the orderly transition of leadership and management in the organization.

What makes this something CEOs should prioritize today? The latest report from Vistage Research, Succession Planning: The CEO’s Guide to Building the Leadership Team of the Future, details four key factors bringing a new level of urgency to succession planning.

1. Changing workforce demographics

Throughout this decade, all baby boomers — born between 1946 and 1964 — will reach the traditional retirement age. Current U.S. Census data shows there are more than 4.3 small businesses in the U.S. with owners age 65 and older, according to the U.S. Small Business Administration. These are companies that could potentially transition to new ownership by 2030. This also translates to many leaders coming to retirement age and leaving gaps in the leadership team and a loss of institutional knowledge.

2. Economic growth

According to forecasts from ITR Economics, an economic growth cycle will begin later this year and accelerate in 2025 and 2026. Increased demand will increase the need for additional personnel, including leaders. CEOs must align their talent strategy with their growth plan and prepare their leaders to capitalize on a surging economy.

3. Workforce velocity

Increased demand for workers will escalate competition, providing employees with opportunities that offer better pay, bigger responsibilities, or a culture that aligns with their workstyle priorities. The unexpected loss of a key leader, coupled with the difficulty, time and cost of hiring a replacement, may hamstring growth.

4. Forecasted global depression

Looming on the horizon is the depression that ITR Economics has been forecasting for the 2030s. Demographics, debt and other economic factors will drive this economic event on a global scale. In anticipation of this depression, CEOs need to create a plan that equips their leaders and workforce for a long and challenging economic cycle.

Effective succession planning is a strategic responsibility of the CEO that goes well beyond the aspects of talent strategy typically managed by human resources. To help leaders of small and midsize businesses think about the new level of urgency for succession planning, the latest report from Vistage provides an essential roadmap for CEOs who aim to ensure their leadership teams can evolve and adapt alongside their growing company.

In the report, you will:

• Delve deeper into the four key drivers of urgency.
• Understand three distinct succession planning scenarios.
• Gain insights and best practices from succession planning experts and Vistage speakers.
• Read real case studies from leaders who have successfully executed succession plans.